Terran Orbital (LLAP) Jefferies Virtual Space Summit summary

Company background and strategic positioning

• Transitioned from CubeSat focus to defense and intelligence satellite manufacturing, with a key partnership with Lockheed Martin extending to 2035.

• Now operates as a prime contractor, bidding globally for government and commercial satellite programs.

• Controls over 90% of its supply chain, manufacturing most components in-house for cost and quality advantages.

• Emphasizes vertical integration and rapid prototyping, enabling quick adaptation and innovation.

• Sees a vast and growing pipeline, with over 140 programs and a $25 billion opportunity, driven by global demand for sovereign satellite capabilities.

Operational advancements and capacity expansion

• Automation and robotics are central, with plans for all components/modules to be robotically assembled by end of 2025.

• New Goodyear production facility opening Q1 2025, expanding assembly space from 20,000 to 80,000 sq ft and increasing capacity to 96 satellites per month.

• Current facilities are at capacity, with rapid fill-up expected for new space due to strong customer demand.

• Propulsion manufacturing is being brought in-house, with a new assembly facility and partnerships to address past supply issues.

• Ongoing transition from manual to robotic assembly, reducing errors and costs while increasing speed.

Financial outlook and profitability

• Margins have improved from zero to 16%, now approaching 20%, with some programs at 34%.

• EBITDA positive targeted for 2024, driven by volume, automation, and supply chain control.

• High fixed costs offset by low variable costs per satellite, with SG&A expected to become a smaller percentage as revenue grows.

• Backlog is growing, supporting improved margins and a path to free cash flow positivity.

• Debt is manageable, with low interest rates and options to refinance or pay off by 2026.